Foster Infrastructure PPP Knowledge Base

Project Identification

An asset investment by a government (such as an infrastructure project) is just part of the solution to a problem. Robust government investment planning proceeds by:

  1. Identifying the problem that government is trying to solve. Typically the problem relates to an unfulfilled need in an area of government service delivery.
  2. Identifying the benefits that are expected if the problem is solved.
  3. Identifying a strategic response that is capable of resolving the problem and delivering the expected benefits.
  4. Developing the strategic response into a set of actions, which may include a set of changes required to government service delivery and assets to support those changes.
  5. As part of the solution, the need for an infrastructure project may be identified.
  6. Once the overall investment (including any infrastructure project) has been properly defined, it must be prioritised along with other investments competing for government funding.

Figure 1: From Problem to Solution (Click figure to enlarge).
Department of Treasury and Finance (Victoria), Investment Management Standard: A Guide for Victorian Government Departments and Agencies;
Foster Infrastructure

Projects are not an end in themselves: They are needed to deliver service outcomes.

Table 1: Relationships between projects and service outcomes.
PPP Projects Service Outcomes
Schools / Classrooms Better Education
Hospitals Improved Health
Roads Transport Amenity

When a service need is readily apparent, it is often easy for government (or the public or lobby groups) to jump too quickly to a single solution for that problem. For example, in Melbourne, Australia, a desire for improved transport between the city centre and the airport has often led to suggestions that an airport rail link should be built. While this has been a common solution in other cities, past studies indicated that such a project would not be viable in Melbourne. Experience in other major Australian cities (Sydney and Brisbane) has been poor, with airport rail links in those cities encountering financial difficulties due to low patronage. To date, much of the debate over the need for an airport rail link in Melbourne has not been based on sound investment analysis. However, the viability of such a link may change over time – there may be a need for this project in the future. Links to further information on this debate are set out below.